The Key Insurance Policies

Welcome

Hello, and welcome. This is Super Structures General Contractors — a national general contractor headquartered in Powhatan, Virginia — here to help you and your clients build something that lasts. We're glad you're with us, and we look forward to connecting with you.

Alright, The Key Insurance Policies. Don't let the plain title fool you. Here's the part that actually matters on the job: Know your policies: GL (injuries/damage), workers' comp (employees), builder's risk (the project), auto, umbrella, and tools. Learn it well and you'll know exactly which policy answers when something goes wrong, instead of finding out from a denial letter.

Contractors typically carry several policies, and each covers a different risk. No single policy covers everything, and the gaps between them are where contractors get hurt. This lesson walks the core policies, what each one actually does, and the limits and exclusions you need to understand before you sign a contract that requires them.

General Liability, the foundation

Commercial General Liability (CGL) covers third-party bodily injury and property damage you cause: a visitor trips over your materials, your crew cuts a water line and floods the floor below, a piece of trim falls and dents a parked car. It also includes personal and advertising injury coverage and a small medical payments limit. Owners almost always require it.

Key features to know:

• Limits are written per occurrence and as a general aggregate for the policy year, plus a separate products-completed operations aggregate. Contracts commonly ask for one million per occurrence and two million aggregate, though requirements vary by owner and project size.
• Completed operations coverage responds to damage that happens after your work is done, which is where most construction defect claims live.
• Exclusions matter as much as coverage. CGL does not cover your employees' injuries (that is workers' comp), your own vehicles, or professional design errors. And the "your work" exclusion generally means it will not pay to redo your own faulty workmanship, only the resulting damage to other property.
• Contractual liability coverage and the additional insured endorsements that owners and GCs demand are covered in the certificates lesson in this course.

Workers' Compensation and Employer's Liability

Workers' compensation pays medical costs and lost wages for employee injuries and occupational illness regardless of fault, and in exchange the employee generally cannot sue the employer. It is required by law in most states once you have employees, with the threshold and rules set by each state. The policy has two parts: Part One is the statutory coverage; Part Two, employer's liability, covers lawsuits that fall outside the statutory system.

Three things surprise new contractors:

• Premium is based on payroll by class code and is audited at year end; underestimating payroll means a bill later.
• If a subcontractor has no workers' comp, their payroll typically gets added to your audit and their injuries can land on your policy. Collect certificates before subs start.
• Your experience modification rate (EMR) compares your claims history to similar contractors; a mod above 1.0 raises premium and can disqualify you from some bid lists. Safety is an insurance strategy.

Builder's Risk, covering the project itself

Builder's risk (course-of-construction coverage) insures the structure and materials while the project is under way against fire, wind, hail, theft, vandalism, and similar perils. It commonly covers materials on site, in transit, and in temporary storage if endorsed, and ends at completion or occupancy. Settle these points before work starts:

• Who carries it. Often the owner; sometimes the contract pushes it to the GC. Check the contract and the certificate so there is no gap.
• What is excluded. Faulty workmanship and design, wear, earth movement, flood, and water intrusion are often excluded or limited unless added by endorsement.
• Limits and deductibles. The limit should reflect the full completed value, including soft costs if the policy offers them.
• Term. Projects that run long need an extension before the policy expires, not after.

Auto, umbrella, tools, and the specialty policies

• Commercial auto — owned company vehicles, plus hired and non-owned coverage for rented trucks and employees driving their own cars on company business. A personal auto policy usually excludes business use.
• Umbrella or excess liability — extra limits that sit above general liability, auto, and employer's liability. Many contracts require it; it usually follows the terms of the underlying policies, so a gap underneath is a gap above.
• Inland marine — tools, equipment, and materials that move from site to site: a contractor's equipment floater for owned and rented gear, and an installation floater for materials before they are built in.
• Professional liability (errors and omissions) — design errors, important when you do design-build or your scope includes engineering or coordination judgment.
• Contractor's pollution liability — releases of fuel, solvents, silica, mold, or asbestos; relevant for demolition, remediation, fuel storage, and much site work, since CGL pollution exclusions are broad.

Going Deeper (Intermediate)

Understand occurrence versus claims-made forms. A CGL policy is usually on an occurrence form: it covers damage that happens during the policy period, no matter when the claim is made. Professional and pollution policies are often claims-made: they cover claims filed while the policy is in force, so canceling the policy without tail coverage can leave old work uninsured.

Also learn the subcontractor exception. On many CGL forms, the "your work" exclusion does not apply to work performed on your behalf by a subcontractor, which is one reason completed operations coverage is so valuable to a GC and why your subs must carry their own.

Advanced / Pro-Level

Pros read the contract's insurance article before they price the job. Required limits, additional insured status on a primary and non-contributory basis, waiver of subrogation, and completed operations coverage for a stated number of years after completion all cost money, and all must be in place before you can sign. On large projects an owner- or contractor-controlled wrap-up (OCIP or CCIP) may provide the general liability and workers' comp for everyone on site, and your bid must then back out your own premium.

Review your loss runs every year before renewal, manage the EMR through claims handling and return-to-work programs, and match deductibles to your cash position. Policy forms and state rules vary, so a construction-focused agent or broker is worth more than the cheapest quote.

Practice Challenge

A client sues over a defect in tile work your own crew installed, and water from the failed tile also ruined the cabinets below. The client expects your CGL to pay for everything. What is likely covered and what is not? (Answer: CGL generally excludes the cost to redo your own faulty workmanship under the "your work" exclusion, so re-tiling is on you or your warranty; the resulting damage to the cabinets is the kind of third-party property damage CGL, through its completed operations coverage, is designed to pay for; that is why quality control, warranties, and completed operations coverage all matter.)

In Practice

A contractor who carries general liability, workers' comp, auto, inland marine, and an umbrella, and who matches limits to each contract, hands a claim to the carrier and keeps building. A contractor who carries general liability only, with no workers' comp, is personally on the hook the first time an employee falls, and may also discover the "sub" who got hurt counted as an employee.

Common Mistakes to Avoid

• Skipping workers' comp or commercial auto because the business is "just me and a couple of guys"
• Assuming general liability covers your own defective work
• Not confirming who carries builder's risk and when it expires
• Letting a claims-made policy lapse without tail coverage
• Buying the minimum and then signing contracts that require more

Takeaway: Know your policies: GL (injuries/damage), workers' comp (employees), builder's risk (the project), auto, umbrella, and tools.

Educational content — not legal, insurance, accounting, or contractual advice. Policy forms, endorsements, and state rules vary; work with a licensed insurance agent or broker and an attorney for your specific situation.